SUNDART HOLDINGS LIMITED (1568.HK)
​AM Capital initiates with Outperform on SUNDART HOLDINGS (1568.HK) with a 12-month target price of HKD 6.6. Sundart has delivered strong revenue growth, steady margin, profit performance and high return on equity, thereby making it an attractive investment opportunity. Over 2013-15, company recorded revenue, gross margin and net income CAGR of 59%, 55% and 71%, respectively. The integrated hotel fit-out contractor enjoys leading market share in the lucrative Macau development market. With experienced management, the company boasts a strong track record and looks well positioned to capitalize on the continuing growth of Macau by adding to their already impressive order-book in 2H. Sundart is a fast growing Company, we assume a forward P/E of 12.3x (current P/E at 18.1x). The company has increased its net income by 112% in 2015, we believe that Sundart can sustain the same pace in 2016, our target for net profit is HKD 750 mn. We expect the robust performance to continue through the next few years given the growth of the fitting out industry in Hong Kong and Macau, driven by upcoming casino hotels, shopping malls and residential properties.
Business overview
Established in 1986, Sundart is a subsidiary of Reach Glory International Limited. It is headquartered in Kowloon, Hong Kong. Sundart is an investment holding company providing fitting-out services, alteration, addition and construction works for residential property and hotel projects in Hong Kong and Macau. Further, it is involved in manufacturing, sourcing and distribution of interior decorative materials segments. It started the fitting-out business in Hong Kong in 1996 and expanded to Macau in 2005. The Company is also engaged in providing project management and consultancy services. Sundart was listed on the Hong Kong Stock Exchange on December 29, 2015.
Sundart Holdings Limited is an investment holding company principally engaged in fitting-out works. Along with subsidiaries, the Company operates its business through four segments: the Fitting-Out Works in Hong Kong segment, the Fitting-Out Works in Macau segment, the Alteration and Addition and Construction Works in Hong Kong segment, and the Manufacturing, Sourcing and Distribution of Interior Decorative Materials segment. The Company is involved in the provision of professional fitting-out works for hotels, serviced apartments, residential properties and other properties. The Manufacturing, Sourcing and Distribution of Interior Decorative Materials segment is involved in the manufacturing, sourcing and distribution of interior timber products such as fire-rated timber doors and wooden furniture. It also provides re-engineering and pre-fabrication services for sizeable fitting-out projects undertaken by the Company.
AMC Wanhai Securities is an independent boutique brokerage covering Hong Kong & Asian listed equities for global institutional cilents. The company focuses on equity sales & trading, equity research, asset management and corporate finance.
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